Customer Relationship & System

UNIT 5: REVIEW AND DECIDE ON SERVICE RECOVERY RESOLUTION

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LEARNING OBJECTIVES
At the end of this unit, students should be able to:

o Describe the causes of service breakdown

o Describe the consequences of service breakdown that is not resolved

o Describe the types of customers in a service breakdown

o Describe recovery techniques using the dimensions in a service quality model

o Describe the procedures for service recovery

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5.1 Describe the causes of service breakdown

Good customer service is crucial to maintain a promising user and purchasing

experience and is the key to continued success. However, certain issues may arise from
time to time that may prevent a business from delivering the best customer service. Here
are some causes of these service breakdowns:

1. Lack of goal setting

Among the major causes of service breakdowns, is poor goal setting on the
company's part. When defining the customer service strategy, it is vital to establish
clear-cut goals before training the employees. Examples of customer service goals
include reducing the number of customer complaints, reducing the average time
taken to resolve customer complaints, improving customer loyalty, improving the
last-mile service, etc.

The company should proceed with employee training only after setting clear goals
so that the customer service representative know what exactly is meant by excellent
customer service. This will give them a clear direction regarding where the company
plans to advance in customer service, allowing them to align their efforts to what the
company wants.

2. Poor employee training

Despite having definite goals, service breakdowns frequently occur because
employees are not equipped with the necessary customer service training. Lack of
effective training can significantly undermine the quality of service even if the
employees have overall goals in mind. For instance, part of the training includes
educating the employees on product information and knowledge, such as its features
and how to use it. If employees do not have sufficient training on this matter, they
will not be able to address complex customer queries about the product, resulting in
the breakdown of their customer service.

3. Lack of tools
Employees need certain tools to make sure they keep delivering the best service
quality and minimise service breakdowns. Not possessing the required tools or not
giving employees access to them can significantly hamper their ability to serve the
customers well. For instance, keeping track of customer complaints is extremely

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important. The bulk of customer service breakdowns result from missing out certain
unresolved complaints. Providing customer service representatives with a solution
or tool for logging customer complaints is a great way to reduce customer service
breakdowns. Many project management systems are available, which automatically
record customer complaint logs and allow employees to take corrective action within
the promised time. Not only will this reduce the chances of service breakdowns, but
it will also ensure that complaints are resolved more efficiently than ever.

4. Low employee morale

Frontline employees are the point-of-contact with customers. A lack of motivation on
their part can be disastrous for customer service levels, causing periodic
breakdowns. There are various reasons for low employee morale.

a. Lack of incentives
Customer service levels depend upon people. If people do not see incentives tied
to results, they are not likely to put in the effort required to improve their service
levels. To prevent service breakdowns, companies should reward good
behaviour and improvements in performance.

b. Lack of empowerment
Not giving frontline employees the authority, tools, and power to solve customers'
problems, often results in customer service breakdowns, when employees are
forced to say that they need to ask someone with higher authority to take a certain
action.

c. Poor treatment of frontline staff

Many companies treat their customer service staff poorly, yet expect them to
exceed customer expectations. If the frontline staff feels that the company does
not respect or care for them, they will not care about meeting the company goals
or preventing customer service breakdowns.

5. Not having a recovery plan

Customer service breakdowns arise in all organisations. However, the ability of the
organisations to address these issues will set them apart from others. Fixing
customer service issues requires businesses to put a recovery plan in place so that
employees know what needs to be done to deal with different cases. However, many

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firms lack a recovery plan. As a result, many frontline employees have no idea what
to do when faced with an unusual situation. This shows customers that the business
is not equipped to handle problems which result in a further customer service
breakdown.

5.2 Describe the consequences of service breakdown that is not resolved.

The following are some consequences of unresolved service breakdowns:

1. Angry customer
The immediate result of an unresolved service breakdown is an angry customer.
When a customer service staff tells the customer that the issue can be resolved
within a specified period, and fails to deliver on that promise, it can easily infuriate
the customer. Even a single angry customer could be devastating for the
organisation's reputation if the customer makes matters big.

2. Losing loyal customers

Loyal customers are a great asset to the company because they stick to the brand
for any new offers and recommend the brand to others, increasing revenue. The
more loyal a customer is, the more will they expect the business to respect them and
take care of them. If they face a service breakdown, and it remains unresolved for a
while, there is a great chance that the customer will no longer stay loyal. In fact, they
are not likely to make any future purchases. Losing loyal customers will eventually
cause the organisation to lose business.

3. Damaged reputation
With access to social media, modern customers are more empowered than ever
before. Social media platforms such as Facebook and Twitter have become popular
avenues for dissatisfied customers to share their experiences with the public.
Naturally, customers are more inclined to share negative experiences than positive
ones. To make things worse, negative feedback catches more attention from the
public. It is more authentic than positive feedback, which may be regarded as paid.
One angry customer with a large following on Twitter, or has a reputable personality
on LinkedIn or Facebook, can badly ruin a company's reputation. This may result in
not hundreds, but thousands of lost customers.

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Many customers didn't want to contact the company and complain, but do share
feedback on social media when they get an opportunity to do so.

"With social media platforms like TripAdvisor and HungryGoWhere, there is no hiding
place for brands with regards to customer service. Every angry customer will
denounce customer service on their chosen social media platform, but if your outlet
is not checking these platforms, you will only know about 40% of them who have
complained directly to you." – Article "60% of Singaporean customers don't complain
about bad service" by Chris Reed

4. Prevent growth
A damaged company reputation not only deprives the company of existing
customers but also prevents the chances of future lead generation. When people
know that the organisation mistreats its loyal customers, they will not be willing to try
the brand and make the first purchase. As a result, an unresolved service breakdown
will hamper the future growth of the business.

5. Loss of talented workforce

The most talented people choose to work at organisations known to offer the best
customer service. They join these best organisations, which in turn rely on the
workforce to continue improving the service levels. If a business starts failing in
resolving customer service breakdowns, the best employees will try to overcome the
situation. And if their recovery plans have not been taken positively by the
organisation, they are most likely to leave the organisation and join a company where
their abilities are more valued.

6. Loss of profits
All the consequences stated above contribute to a loss of the firm's revenues and
profits. Losing existing and future customers, and a bad reputation will result in
losses in revenue. Losing talented employees will further deteriorate the service
quality and the firm's ability to resolve customer service breakdowns, which are likely
to persist even longer.

5.3 Describe the types of customers in a service breakdown

Dealing with difficult customers is a significant part of customer service. Despite setting
up policies to ensure high-quality service standards, companies often come across

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certain customers that are difficult to handle. Some customers might be rude to the
company's customer service staff; others might be too demanding. Each one needs to
be dealt with differently.

Ultimately, it is the way how companies deal with difficult customers, which either makes
them loyal or switch to a different brand. Here are some types of difficult customers:

1. Angry customer
The most difficult customer to deal with is an angry customer. Customer may be
upset by the quality of the product, service rendered by the customer service staff or
any other aspect of the company. Emotions are high, and the enraged person may
get personal with the customer service staff and utter words they may not realise
they have said. Hence, it is easy for a customer service staff to lose their temper, be
caught up in the wave of anger and raise their voice in response. That is the worst
possible way to deal with an angry customer.

The best way to deal with an angry customer is to keep listening. Any interruptions,
even if they are legitimate, either will augment their anger or will be taken as an
excuse, especially if it is an ongoing problem. The first step should be to allow the
customer to vent their frustration. However, when listening to the customer, customer
service staff should try to focus on the problem rather than taking the comments
personally. Once the customer has done complaining, the customer service staff
should genuinely apologise and let them know how sorry they are. As a
representative of the company, they should be prepared to take some responsibility
for the trouble caused to the customer. The next step the customer service staff
should take is to immediately begin working on a solution and let the customer know
their concern is now a priority.

2. Dissatisfied customer
When a customer is not pleased with a product or service; they are dissatisfied and
will likely complain about it. This usually happens either when the customer has
expectations beyond what the product or service could deliver, or when the product
or service failed to deliver on the initial promise.

Regardless of whether the customer's complaint seems justified, the first step the
customer service representative should take is to apologise. Then, they should seek

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to resolve the issue, giving the customer a reasonable deadline. However, the
customer service staff must balance their time between resolving this complaint and
catering to other customers' needs. Ideally, a solution should be provided, but if the
customer service staff could not come up with a potential solution, they should try
other strategies, such as offering discounts or a free product to keep the customer
loyal.

3. Indecisive customer
An indecisive customer is one that is confused about a product or process. They will
ask countless questions, but cannot seem to make a decision, flip-flopping between
products. Dealing with indecisive customers can be both difficult and frustrating.
Whether they ask for an expert opinion or not, the customer service staff dealing with
customers, should acknowledge their indecision and be completely honest when
suggesting a solution.

Instead of being pushy, the customer service staff should give their honest opinion
backed by proof and data. Sharing other customers' feedback about their
experiences with the product might work in this case. For instance, if a customer is
struggling to choose between a cruiser bike and a mountain bike, the customer
service staff should begin with some technical differences between the two options
and then focus on customer stories that look similar based on this customer's needs.
For example, if the customer service staff remembers a customer who lives near the
beach like this customer, they can tell the customer which option the past customer
opted for and how happy they are with the product. Hence, both facts and anecdotes
could be used to deal with an indecisive customer.

4. Demanding customer
A demanding customer is one that makes demands, which the business may not be
able to deliver. For instance, they might need a special discount on a pair of sneakers
with a fixed price or special attention from the supervisor at that very moment. Some
customers, including the loyal ones, have a sense of entitlement. The more they
spend on a particular brand, the more demanding they might become. When an
organisation cannot deliver on a customer's demand, it becomes a challenge.
Because on one hand, the business does not want to lose the customer, and on the
other hand, it is not sure how to meet their enormous standards.

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The single most effective solution to deal with a demanding customer is to

compromise. If fulfilling the customer's demand requires the business to go the extra
mile, it should be prepared to do so. But what is even more important is, to inform
the customer that the business has served them beyond its usual practice. If the
business does not compromise, it risks losing the customer to a competitor.
However, even if it compromises, but fails to communicate the extra effort, the
customer will become increasingly demanding and a time will come when meeting
their expectations will incur losses.

5. Talkative customer
A talkative customer is not necessarily upset with a product or service. In fact, they
might even be a happy customer. The issue lies in their talkative nature, which
means they might engage in a never-ending conversation with the customer service
staff. Some companies may not view this as a problem. An online shoe retailer
known as Zappos prides itself on having a phone conversation between a customer
and its customer service representative that lasted for 10 hours. It considers this a
sign of customer loyalty.

However, a business with limited resources will need to find a solution so that its
customer service team has enough time to address all its customers on time. Hence,
such businesses should think of ways to turn such customers away politely. For
instance, a customer service staff can break an ongoing conversation by suddenly
asking to leave a testimonial or a positive review for the product or service right after
the phone call. Even if there is no such aspect to turn the customer's attention to, the
customer service staff can simply tell the customer that they are needed somewhere
else and request their contact information to contact them later.

6. High-Roller customer
These are the big spenders on a particular brand, which no sensible businessperson
would want to lose. These customers are extremely brand loyal and have the
potential to shout about the brand and become brand advocates. However, they will
not want to be treated like ordinary customers. For their loyalty, they want to feel
privileged and treated specially by the company. Only a few businesses will find
these customers problematic.

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Once the business identifies its high-roller customers, they should create a proper
plan to exceed their expectations to turn them into brand advocates. If possible,
customer service staff should always go the extra mile to serve these customers.
This 'royal treatment' to the most valued customers encourages them to keep coming
back and discuss their positive experiences with their peers and friends.

7. Rip-Off customer
If a customer service staff, addressing a customer complaint, comes up with
reasonable solutions, but the customer never seems satisfied, it is probably a rip-off
customer case. A rip-off customer wants to get something they are not entitled to
receive, so instead of resolving the issue, they always respond with 'not good
enough.'

Dealing with rip-off customers is not any easier than dealing with angry customers.
Besides keeping their emotions in check and staying positive all the time, customer
service staff should document everything and back their position with actual,
quantifiable data. One way is to ask such customers to specify what exactly they
expect. Upon speaking it out, the customer may realise that they are asking for
something they are not entitled. No matter what, the customer service staff should
always comply with the company's established policies for customer complaints
when handling such customers.

5.4 Describe recovery techniques using the dimensions in a Service Quality Model

Firms to achieve the desired levels in the service quality offered to customers, use the
Service Quality Model. It comprises of five dimensions that can be used to formulate
recovery techniques following a service breakdown.

1. Reliability
Reliability means that the business delivers on its commitments related to product
delivery, service quality, issue resolutions, etc. Organisations need to understand
the role of reliability in customer expectations. When companies fail to deliver the
core service attributes and service outcomes, a service breakdown occurs. To help
recover from the breakdown, firms should assure their customers that they will be
able to perform the promised services accurately and dependably.

2. Empathy

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Demonstrating empathy is extremely important in recovering service breakdowns.

This means that companies should provide their customers with individual attention
when addressing their complaints. It is never a good idea to send standard,
automated emails to dissatisfied customers. Treating every complaining customer
one to one shows the customer that the company cares for them and builds up their
trust and confidence in the company, making them loyal.

On the other hand, if a company does not provide individualised attention to its
customers when they complain, they will most probably switch to a more caring
brand.

3. Responsiveness
This dimension has to do with the willingness and promptness to solve customer
complaints. No matter how empathetic the company is, if it fails to respond and
resolve the complaint on time, the customer's dissatisfaction will persist. Companies
need to be attentive when dealing with customers' complaints and queries to recover
from customer service breakdowns. Moreover, the responsiveness needs to be
communicated too, by letting the customer know how long they need to wait for
assistance or a potential solution. Also, service flexibility and customisation are
critical in this dimension.

4. Assurance
This dimension emphasises the importance of building customers' trust and
confidence to retain customer loyalty and gain a competitive advantage in the
industry. This dimension becomes even more critical in cases where the customer
cannot evaluate the company's ability to deliver on its promises. Recovery
techniques involve continuous interaction with the customer; such as sharing
positive customer feedback and testimonials to 'confused' customers and nurturing
them to become loyal customers.

5. Tangibility
Even though services are intangible, their quality is often seen from the tangible
aspects associated with them. These can be the appearance and outlook of physical
facilities, communication mediums, the equipment, and personnel. Hence, recovery
techniques can involve improving the appearance of communication mediums and
the representatives dealing with them.

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5.5 Describe the procedures for service recovery

1. Listen to the customer

When dealing with a customer complaint, the first thing a customer service staff
should focus on is to listen to the customer. Depending upon what the customer
says, it gets tempting to react and address the problem as soon as possible.
However, by interrupting or cutting them off, customer service staff give the
customers another reason to be angry and dissatisfied. Often, all a customer wants
is to be heard. When listening, customer service staff should keep agreeing so that
the customer knows they are being taken seriously.

2. Empathize
The worst thing a customer service staff can do is disagree with the customer right
away. Agreeing with the customer and expressing empathy is a far more constructive
approach that will prevent the conversation from turning adversarial. After listening
to the customer, customer service staff should apologise and state that they
completely understand what the customer has gone through. This will not only help
to calm the customer down, but it also means that the customer will be more flexible
when it comes to resolving the issue.

Empathising also involves being on the customer's team. Customer service staff
should make it clear that they are on the customer's side. For instance, if they are
dealing with a customer who wants to return a product beyond the return policy
window, a reply with 'Sorry, it's too late to return the product' can position themselves
as the opposition. A better response could be 'It appears that this purchase is outside
of our return policy window, but let me check what I can do for you.' The customer
will view the customer service staff as an ally and trust them more.

3. Own the problem

Before addressing the complaint, customer service staff should put themselves in
the customer's position and view the problem from the customer's perspective. This
way, they will truly care for the customer and will find it easier to solve the problem.
In the majority of cases, there is a reason why a customer is unhappy. To own the
problem, customer service staff should try to get to the origins of their discontent and
take advantage of it to solve the problem. Asking customers what they expect also

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gives a clear idea of the problem. It is even possible that the customer asks for less
than what the customer service staff initially thought they would have to offer.

Owning the problem not only helps to please the customers but may also lead to
solutions that customer service representatives never realised they had.

4. Act to solve
Once the customer service staff is clear on the problem and knows what the
customer expects, they should immediately find the best possible solution. This is
where the capabilities and soft skills of the customer service staff matter. They
should clearly state that the complaint is being taken seriously, and the company is
working on getting it resolved. Depending upon the nature of the problem, customer
service staff should give a date when the customer can expect a solution. This will
make things more definite and credible to the customer. However, if the complaint
seems complex and the customer service staff is unsure how long it might take to
resolve it, they should avoid giving a date.

Nonetheless, customer service staff should always set a deadline for themselves to
solve a complaint. Without a deadline, the complaint can easily slip through the
cracks and remain unresolved for longer than required. To be able to address
customer complaints in the minimum possible time, customer service staff should
know who to contact to solve the issue.

In the case of product-related queries, the customer service staff should know the
product's ins and outs to address the problem as soon as possible. They cannot
afford to delay such queries because it would give the impression that the company
cannot handle customer issues.

5. Establish the reason for the breakdown

When dealing with a dissatisfied customer, it always helps to specify a reason for
the service breakdown after an apology. A loyal customer never expects a service
breakdown from the company, so they are disappointed when it happens. To keep
them loyal, the customer service staff should let the customer know that it is not
something the customer would commonly face. And should be transparent about
what caused the service breakdown. To place more emphasis on assuring the
customer that the same problem would not arise again.

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6. Follow up / escalate
It is common for customer service staff to lose track of some important customer
complaints. This worsens the problem instead of resolving it. As it takes time to
resolve complaints, proper follow up with the customer is extremely important to keep
them informed. This is particularly important when the customer service staff
committed a date to solve the problem. Telling the customer that you need more time
might annoy them, but not telling them will certainly enrage them afterwards.

When customer expectations are not met, or they feel that their views have not been
heard, it is human nature to want to "intensify" and escalate to the next level.

Here are two ways to escalate service breakdown:

A. Know the path

Document clear escalation paths for the most common types of issues. For
example, when issue A happens, then the first contact is to Manager, Jane Lim.
If Jane is unavailable, contact Director, Hamid Sulaiman. If Hamid is not available,
then contact Vice President, Violet Tan.

B. Know the medium

Determine the best method(s) to escalate within the business. For example, for
certain types of issues, businesses may agree to start with email communication.
For more severe issues, a conference call may be more valuable.

7. Document
When there are numerous aspects associated with a customer complaint, or when
the issue is complicated, certain details can easily be missed out. Customer service
staff should be trained on how to quickly document a customer complaint to come
up with a comprehensive solution that caters to every aspect of the complaint.
Documenting complaints also make the customer feel valued as they think the
company is taking the issue seriously.
Once the problem is resolved, customer service staff should further communicate
with the customer to request feedback on the service quality received and if they are
satisfied with the company.

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